Why do Insurance Agents Fail (2024)

We’ve enlisted the help of over 100 established insurance professionals to get their take on why insurance agents often fail and what steps you can take to be successful. Avoid these common pitfalls and start your career as an insurance agent successfully.

How many insurance agents fail?

The vast majority of new insurance agents fail or quit. While it’s tough to nail down exactly what percentage of insurance agents fail to succeed within the industry, the unsuccessful majority succumb to common mistakes that can be avoided with diligence, patience, and hard work.

Why Insurance Agents Fail: Common Mistakes

Insurance agents succeed when they prioritize their customers’ needs over their own profits.

The most commonly cited reason insurance agents fail is that they fail to listen to their customers and take the time to find the best product to suit their needs. Agents who bring the right solutions to customers build trust, and that helps them build a book of loyal customers. Integrity is a cornerstone of success in the insurance industry. The agents with integrity have the most potential to make it long-term.

Insurance agents enter the industry with overambitious expectations of growth and success.

New professionals often have unrealistic expectations of how long it will take to build a book of clients and generate ongoing revenue. Building your reputation in a community takes time and requires dedication, proactivity, and patience. The first five years will be difficult for anyone trying to break into this industry.

While building your business, you should expect to work longer hours, including nights and weekends, to accommodate clients. You must be willing to work hard to build your book of clients. This industry is about long-term growth. It’s not a get-rich-quick scheme.

Insurance agents often lack necessary mentorship.

Given the large population of older insurance agents in the field currently, mentorship has never been more readily available for new agents. Look for opportunities to connect with seasoned industry veterans, who can share their experiences and wisdom with you. It’s priceless.

According to Chronus, 71% of Fortune 500 companies offer professional mentoring programs for their employees. Hopefully, you work for an agency that offers a mentorship program. Not only does this help with knowledge transfer, but also career and leadership development.

While technology continues to change many of the day-to-day particulars of the industry, the principles of success in the insurance industry are the same today as they have always been. A great way to develop business strategies that will work today is to examine and learn from the ones that have worked in the past

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Insurance agents need to be able to handle rejection well.

Rejection hurts. Fear of rejection is common among anyone working in sales, particularly those who are just learning how to sell their value and products. Agents who engage in activities like writing industry articles, creating a newsletter, or attending community events tend to succeed more in the long run because they are able to regularly communicate with potential customers even if they say “no” initially.

These activities also help you build credibility and confidence in yourself, which helps you better take rejection when you receive it.

Insurance agents must be involved in the community or professional organizations.

Like most salespeople, insurance agents have the added challenge of debunking the “used car salesperson” stigma. One way to accomplish this is by getting more involved in the local community. Not only does it help to build credibility, but it increases visibility among community members. Relevant professional organizations are another great way to get involved in a local community, build relationships, and even find potential new clients.

Some agencies have gotten involved in a program called Agents of Change. Allstate agent Jay Adkins developed the program to give back to the community and differentiate his agency from competitors. In this program, an agency chooses a community cause every 45 to 60 days, and a campaign is launched to provide assistance to the child, family, nonprofit, or event in need.

Not only does this help put the agency in front of the community members often, but it also helps agents build a solid reputation in the community. Furthermore, it gives you conversation pieces and an opportunity to connect with prospective customers on another level.

Insurance agents should have a long-term business plan with specific goals.

One of the biggest mistakes new insurance agents make is assuming they’ll be successful right off the bat. Building a book of clients requires time, commitment, and goals. The best way to get focused on the right business goals is by having an organizational business plan.

As of the end of 2012, only 15% of agencies surveyed by Insurance Journal had a written business plan. Developing a plan involves writing down goals for revenue, lead generation, conversion, and anything else you want to measure.

You will also want to define what you are best at, what opportunities you have, and how to focus your marketing efforts around that. When you have a clear plan to focus on, you will be able to evaluate all of your activities against it.

Industry leaders embrace and adapt to new and emerging technologies first.

An important skill for all insurance agents is being able to adapt well to change. Technology is constantly evolving and changing the way lead generation and tracking are performed. Understanding customer relationship management (CRM) tools and finding ways to automate lead generation efforts and marketing will allow you to make time for other tasks.

Social media is another important tool for marketing your insurance business. Because of the robust opportunities to target particular demographics and geographical locations, social media ads can be a great way to reach prospective customers affordably. You can also use social media to promote your community involvement and partnerships. This will help to build the reputation of your business.

Try Today’s Insurance Licensing Question Of The Day

Insurance agents must be disciplined in time management.

Although flexibility is a big perk in the insurance industry, it can make time management a struggle for new agents entering the business. A good way to ensure you use your time well is to block out time for prospecting and sales activities. Without that set time, it is much easier to let non-sales-related tasks take (or steal) priority. You need to understand how to work smarter and harder.

Insurance agents should ask themselves:

Is this activity moving me toward a business goal?
Is this activity moving me toward a personal goal?
How much business can I attribute to this activity in the past?

Activities that don’t qualify should be done minimally. Keeping track of how you spend your time consistently helps identify work habits that don’t support the goals of the agent and the organization.

Insurance agents are marketers, too.

While people skills are crucial, many insurance agents fail because they do not know the market well enough. One of our survey respondents even claimed that in order to be successful in the insurance industry, 75% of efforts should be in marketing, 20% in sales, and 5% in operations. Marketing can be a daunting task. Determining the ideal customer segments for the products you sell and how to best reach those audiences is a good starting point.

A referral marketing program that benefits both existing and new customers is a cheap and easy tactic that can produce great results. Agents who establish themselves as thought leaders in the industry by blogging, creating newsletters, and writing for larger insurance publications build a reputation and name recognition in the community.

These are also great opportunities to get links back to your website, which helps build website authority and can help it rank better in search engine results.

As an insurance agent, being unreliable is a non-starter.

“Not enough follow up and follow through” is one of the most commonly cited reasons insurance agents fail. While many agents are well-intentioned when they promise to get back to a client, it is often poor organizational skills that lead to the lack of follow-through.

Getting into the habit of following up on sales leads as soon as possible will make a big difference in conversion. With a solid, consistent system in place, you will be less likely to neglect or forget to follow up with your prospective customers.

Insurance agents must be knowledgeable in state laws and regulations.

A strong desire to learn and keep up with the industry is an important trait for an insurance agent. Laws and regulations change frequently in different states, and it is vital that agents know what those changes mean to their customers. Keeping up with publications like Insurance Journal, PropertyCasualty360, and other trade journals like the NAIFA blog is important. If your organization has an intranet site, that is a good place to stay informed of changes and how they may impact their customers.

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Insurance agents must be knowledgeable in products and offerings.

Listening to clients is vital to the success of insurance agents. A common reason insurance agents fail is not taking the time to listen to client’s needs and determine what product truly suits their situation. There is an overwhelming amount of insurance products on the market, and it can be difficult to keep up with all the options. It is important that you take the time to research products and figure out what makes the most sense for any situation. This is how agents earn the trust of clients and retain them long-term.

Organized documentation is key for insurance agents.

Proper documentation is critical for success in any industry. For insurance, an agent’s files are used as key evidence in defending error and omissions (E&O) cases. A single piece of documentation can lead to a decision in favor of an agent in court. Compliance audits by the government are another reason to have detailed documentation of all activities by agents.

Hopefully, you work with an agency that utilizes an Electronic Document Management System (EDMS) to create efficiencies and eliminate costly inconsistencies in paper-based processes. An EDMS allows users to access documents anytime, anywhere. If a client calls while you are out of the office, documents could still be accessed and discussed on the spot. This saves time and reduces the amount of phone tag you have to play with clients.

Insurance agents should ask for referrals.

Referrals are one of the most cost-effective and efficient ways to market your agency. They also tend to hold more weight with prospective customers than traditional marketing efforts because the endorsem*nt comes from a peer rather than the agency itself. It has been estimated that 70% of referral business closes and converts.

A common mistake of insurance agents is to wait too long to ask for a referral. It can be easy to shy away from asking for a referral until the client is finished with their experience or services, but why wait to ask for a referral when something could go wrong in their experience later? It is human nature to want to help others succeed. The worst that can happen is someone will not give a referral, but then you are no worse off than if you had not asked at all.

Insurance agents should not make empty promises to clients.

When you make promises you can’t deliver on, it opens up the possibility of lawsuits. It is also the quickest way to lose the trust of your clients, which impacts retention and long-term profitability. The best way to prevent that is to operate from a credo or service mantra for yourself. Include promises to work for the client; make their lives as easy as possible; take the time to understand their needs and select the best products for them; offer choices and walk clients through them in detail; and own your mistakes.

Operating from a series of promises to deliver customer satisfaction based on your organization’s values can help guide your client relations.

Take The Next Step

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As an enthusiast in the insurance industry, I've been immersed in the intricacies of insurance agent success and failure. The challenges new agents face are often multi-faceted, from unrealistic growth expectations to a lack of customer-centric focus. Here's a breakdown of the key concepts highlighted in the article:

Failure Rate of Insurance Agents:
- While the exact percentage of failing insurance agents varies, a significant majority does not achieve success due to common pitfalls that could be avoided.
Reasons for Failure:
- Agents fail when they prioritize profits over customer needs, neglecting to listen and find the best solutions for their clients. Integrity and trust-building are crucial.
- Overambitious expectations of quick success hinder the understanding that building a client base takes time, dedication, and patience.
Necessary Mentorship:
- Lack of mentorship contributes to failures. Connecting with experienced professionals and learning from their insights is invaluable for new agents.
Adaptation to Technology:
- While technology evolves, fundamental success principles remain constant. Learning from past strategies and adapting to emerging technologies is vital.
Handling Rejection and Community Involvement:
- Agents who handle rejection well and engage in community activities tend to succeed. These activities build credibility, confidence, and relationships.
Long-Term Business Plan and Goal Setting:
- Having a clear, written business plan with defined goals is crucial. A small percentage of agencies have a formal plan, yet it's a key tool for success.
Adaptation to Emerging Technologies:
- Successful agents embrace and leverage new technologies like CRM tools and social media for lead generation and marketing.
Time Management and Prioritization:
- Effective time management, especially for sales-related tasks, is vital. Agents need to discern activities contributing to business and personal goals.
Marketing Skills:
- Knowledge of the market and effective marketing strategies are essential. Establishing oneself as a thought leader through blogging, newsletters, and community involvement aids in reputation-building.
Follow-Up and Reliability:
- Lack of follow-through is a common failure point. Consistent follow-up with leads is crucial, supported by robust CRM systems to track interactions.
Regulatory Knowledge and Product Expertise:
- Staying updated on state laws, regulations, and insurance products is indispensable. Clients trust knowledgeable agents who understand their needs.
Documentation and Referral Marketing:
- Organized documentation is critical, aiding in compliance and legal matters. Referral marketing, driven by timely requests, is a powerful tool.
Avoiding Empty Promises:
- Making promises and failing to deliver damages trust. Operating by a service-oriented mantra and upholding organizational values fosters strong client relations.

Each point emphasizes the multifaceted nature of success in the insurance industry, intertwining interpersonal skills, technical expertise, adaptability, and business acumen. Success demands a blend of these skills and a commitment to ongoing learning and improvement.